SMM Morning Comments (Feb 19): Shanghai base metals all cruised higher as sliding global new Covid cases keep investors optimistic about economic recovery

SHANGHAI, Feb 19 (SMM) — Nonferrous metals on the SHFE advanced across the board on Friday morning, holding onto overnight gains, as investors were optimistic about economic recovery as global new COVID-19 cases dropped and the US Federal Reserve was determined to continue supporting the economic recovery.

Shanghai base metals rose acros the board in overnight trading. Copper added 0.8%, aluminium advanced 1.5%, zinc jumped 2.03%, nickel rose 2.27%, lead increased 1.1% and tin surged 3.87%. 

The LME complex performed similarly on Thursday. Copper rose 2.29%, aluminium increased 1.35%, zinc advanced 2.38%, nickel jumped 2.29%, lead inched up 0.9% and tin firmed 2.44%. 

Copper: Three-month LME copper jumped 2.29% to close at $8,606/mt on Thursday, after earlier hitting an eight-year high of $8,633/mt. The most-active SHFE 2104 copper contract added 0.8% to end at 63,230 yuan/mt in overnight trading.

The number of people applying for unemployment benefits for the first time in the United States last week reached a four-week high, suggesting a slower recovery in the labour market. US Treasury Secretary Yellen reiterated that the economy needs a $1.9 trillion stimulus plan. On the other hand, global new COVID-19 cases dropped to the lowest since October 2020, which made investors optimistic about future economic recovery, and the continued low US dollar index helped keep copper prices at high levels. LME copper is expected to trade between $8,570-8650/mt today, and SHFE copper between 62,800-63,300 yuan/mt, while spot copper will be traded at premiums of 30-100 yuan/mt.

Zinc: Three-month LME zinc advanced 2.38% to settle at $2,877/mt on Thursday after hitting a nearly six-week high of $2,880/mt earlier in the session. Zinc stocks across LME-listed warehouses dropped by 1,500 mt or 0.53% to 279,850 mt. Global economy continues to recover as new COVID-19 cases declined and the US Federal Reserve reiterated to keep interest rates near zero. LME zinc is likely to move between $2,850-2,900/mt today.

The most-traded SHFE 2103 zinc contract gained 2.03% to close at 21,590 yuan/mt in overnight trading. Optimism over post-holiday orders and upbeat macroeconomic environment boosted zinc prices. The SHFE 2103 zinc contract is likely to move between 21,250-21,750 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen at 60 yuan/mt against the March contract.

Nickel: Three-month LME nickel surged to a new high in nearly six and a half years of $19,210/mt on Thursday before paring some gains to end 2.29% higher at $19,205/mt.

The most-liquid SHFE 2104 nickel contract increased 2.27% to settle at 141,700 yuan/mt in overnight trading, with open interest rising 19,981 lots to 193,000 lots.

Lead: Three-month LME lead firmed 0.9% to close at $2,128/mt on Thursday. 

The most-liquid SHFE 2103 lead contract increased 1.1% to end at 15,655 yuan/mt in overnight trading. Production resumption across upstream and downstream plants and inventory buildup across lead smelters will be monitored.

Tin: Three-month LME tin surged 2.44% to settle at $25,140/mt, after hitting its highest since 2012 at $25,470/mt earlier in the session.  Concerns over global tin supply and a weaker US dollar boosted tin prices. LME tin is expected to fluctuate between $25,000-28,000/mt today. 

The most-traded SHFE 2104 tin contract soared 3.87% to close at 178,020 yuan/mt in overnight trading, with open interest adding 4,898 lots to 39,468 lots. It is likely to move between 170,000-180,000 yuan/mt today.